Green energy 'feed-in tariff' plan gets muted welcome

Plans to reward eco-friendly householders for the green energy that their solar panels produce have received a muted welcome.

The clean energy cashback plan, known as "feed-in tariffs", offers incentives from April for those who install small scale renewables on their homes.

The government claims one in 10 homeowners could fit panels or small wind turbines by 2020.

But the scheme has been criticised as not generous enough.

Payments

The UK gets about 5.5% of its electricity from renewable sources and, in order to hit green targets in 10 years' time, this would have to rise to 30%.

The feed-in tariff will change the way householders and communities think about their future energy needs

Energy Secretary Ed Miliband

Under the programme, people will be paid a fixed rate by their energy provider for electricity from small renewable power sources. They could also save money on their bills.

Homeowners who install photovoltaic panels could earn £900 a year when they first put in the technology, along with saving £140 a year on their bills, the Department of Energy and Climate Change (DECC) said.

Renewable energy groups suggest people will have a 5% to 8% rate of return on their initial green investment for up to 25 years, although this technology remains relatively expensive to install.

Solar panels and wind turbines of up to five megawatts will be eligible for the scheme. The homeowners will receive cashback on the electricity these devices generate, even if they use some of that energy themselves.

"The feed-in tariff will change the way householders and communities think about their future energy needs, making the payback for investment far shorter than in the past," said Energy Secretary Ed Miliband.

However, the cost of the scheme will come from higher charges for other customers who do not fit renewable energy sources. The typical customer will face an extra £11 on their annual bill by 2020, DECC said.

'Lack of incentive'

While many consumer groups have welcomed the move, they have also criticised the level of incentive payments provided under the scheme.

Different types of "green energy" suit different locations

"Ministers have been far too timid with a policy that could make a significant contribution to cutting emissions and boosting energy security," said Dave Timms, of Friends of the Earth.

The Solar Trade Association said the rate of return was half of that seen under other schemes.

And Liz Laine, of watchdog Consumer Focus, said that the scheme could help people make big savings and cut carbon emissions, but more ambitious targets were needed from the government.

"It needs to offer more attractive cashback rates to overcome the cost-barrier of installing this technology and provide better information and advice to consumers," she said.

Proposals for a second incentive scheme for renewable heat, which will pay people to install technology such as ground source heat pumps and biomass boilers, have also been published. Details will be published in the 2010 Budget.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.